A Beginner’s Guide to Travel Rewards – Part 1

Not because I’m scared of heights or dying in a crash, but because I have such a hard time fitting into those little seats. For those of you who haven’t met me in person, I’m 6’4” and 225 pounds. And apparently airplane seat designers didn’t have those dimensions in mind when they figured out how to cram all of those seats into one plane.

Whenever I fly, I try my best to get an exit row or upgrade to a “comfort +” type of seat. But I dream of flying overseas first class at least once. I get so jealous of my friends who enjoy the luxurious space of first- or business class for work. (However, I’m not jealous of all they have to do to rack up those miles.) I swoon at their pictures of private pods and reclining chairs. I want this comfort the most whenever I fly to visit my brother and sister-in-law who live in Germany, which Ben and I will do again this summer.

While preparing for our upcoming flight, I was inspired by watching a CBS Sunday Morning segment on the travel rewards game. Some travelers work this system so well that they get flights for free and upgrades without paying much at all. Because Ben and I don’t travel much, I’ve always focused on cash, rather than travel rewards. But could I use these rewards to stave off stiff legs and no sleep on another 10-hour trip? I decided to check it out.

As with most of my personal finance related experiences, I want to share with you want I’ve found. I’ve split my findings it into two posts: first the basics of these programs and second how to optimize them.

Ways to Get Rewards

Most people get travel rewards in two ways — directly from the airlines and/or from travel rewards credit cards. Luckily, it doesn’t have to be either or. You can use both!

To get travel rewards directly from the airlines, you sign up for the airline’s frequent flyer program. These programs are free, and you usually get a certain amount of points based on how far you fly. It’s not usually a one-to-one tradeoff. That is, flying 4,325 miles from Chicago to Germany doesn’t get you 4,325 points.

You can use those points to get flight upgrades, “free” trips or additional perks at the airport. I put “free” in quotations because you still spend money to get these points. But that seems okay if you’re going to spend the money anyway. You may also get points for previous flights if you sign up within the program’s grace period, usually three to six months.

You can also earn points without traveling by signing up for travel rewards credit cards. Most credit card rewards programs give you a certain amount of points based on the amount you spend on the card. You can also get bonus points just by signing up and spending a certain amount of money within a specific time frame.

I signed up for the Chase Sapphire Preferred card, which offers 50,000 bonus points if we spend $4,000 in three months (which we will easily do considering the cost of our plane tickets). We get an additional 5,000 points just by adding Ben as an authorized user.

I also got the American Airlines card, which gives you a 30,000 mile bonus when you spend $750 within the first three months. We get these miles in addition to the miles we accumulate from the purchases (with the Chase card we get one point for every dollar spent). I chose these cards because I know their rewards system works directly with the airline that we will take to Europe. We’re hoping to accumulate enough points between now and the trip to upgrade our seats.

While airline and credit card miles are the most common ways to get points, you can also get travel rewards through online shopping, investment custodians or survey companies. They key is to understand the nuances of each program and not get so overwhelmed that you lose track of the points you accrue. More on that next week.

How to Redeem Your Travel Rewards

Once you have the points, the fun comes from redeeming them. You simply go to the site where you want to book a flight, upgrade, etc. At the beginning of the purchase, it will ask if you want to use rewards points. Enter your rewards number and search for the benefit.

A screen should show you how many points you need for the purchase and any additional costs. At that point, you can complete the purchase. If you’re purchasing a flight with miles, you’ll still likely need to pay taxes and fees. So keep that in mind when considering the total out-of-pocket costs. If you want to upgrade, as Ben and I do, you can usually do that while booking or after booking the flight.

While all of this sounds straightforward and easy, the process can get complicated. Restrictions, blackout dates and other rules usually apply to these programs, and different programs have different rules. It’s so complex that some people make a living teaching others how to get around all of the rules.

Next week I’ll get into some ways to optimize rewards and avoid pitfalls while using these programs. In the meantime, feel free to email, message, or tweet me with insights or questions.

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Brian Thompson Financial LLC (“BTF”), is a Registered investment Adviser in the State of Illinois. Based in Chicago, BTF focuses specifically on serving the LGBTQ community locally and nationwide. Brian Thompson, JD, CFP® is a proud member of NAPFA, XY Planning Network and Pride Planners.